Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

! Required information (The following information applies to the questions displayed below.) Astro Co. sold 19,700 units of its only product and incurred a $59,290

image text in transcribedimage text in transcribed

! Required information (The following information applies to the questions displayed below.) Astro Co. sold 19,700 units of its only product and incurred a $59,290 loss (ignoring taxes) for the current year, as shown here. During a planning session for year 2020's activities, the production manager notes that variable costs can be reduced 40% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $147,000. The maximum output capacity of the company is 40,000 units per year. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31, 2019 Sales $ 732,840 Variable costs 549,630 Contribution margin 183, 210 Fixed costs 242,500 Net loss $ (59,290) 2. Compute the predicted break-even point in dollar sales for 2020 assuming the machine is installed and there is no change in the unit selling price. (Round your answers to 2 decimal places.) Proposed Contribution Margin per unit Sales $ 37.20 Per unit Variable costs 27.90 Per unit $ 9.30 Per unit Contribution margin Contribution Margin Ratio Choose Numerator: Choose Denominator: Contribution Margin Ratio = Contribution margin ratio 3,720.00% - Contribution margin per unit 1 Selling price per unit $ 732,840.00 $ 19,700.00 Break-even point in dollar sales with new machine: Choose Numerator: 1 Choose Denominator: = Total fixed costs / = Contribution margin ratio 25.00% Break-Even Point in Dollars Break-even point in dollars $ 970,000 $ 242,500 =

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Integrated Audit Practice Case

Authors: David S. Kerr, Randal J. Elder, Alvin A. Arena

6th Edition

0912503564, 9780912503561

More Books

Students also viewed these Accounting questions

Question

What is job rotation ?

Answered: 1 week ago

Question

Persuading Your Audience Strategies for

Answered: 1 week ago